Europe open: Stocks recover as investors eye Fed

European stocks rose in early trade, recovering from recent Brexit-driven losses as investors awaited the latest US rate announcement and comments from Federal Reserve Chair Janet Yellen.

At 0845 BST, the benchmark Stoxx Europe 600 index was up 1.1%, Germany’s DAX was 0.8% higher and France’s CAC 40 was 1.2% firmer.

At the same time, oil prices were in the red amid ongoing worries the UK might vote to leave the European Union at next week’s referendum and on supply glut fears. West Texas Intermediate was down 0.9% to $48.08 a barrel and Brent crude was 0.8% lower at $49.42.

Rebecca O’Keeffe, head of investment at Interactive Investor, said: “After a torrid few days for markets, European investors are bargain hunting, having concluded the market is oversold. Although this may prove to be a very astute move, with volatility and the possibility of negative news still high and the EU referendum genuinely too close to call, the upside potential for UK and European stocks is likely to remain limited until the result is known.

“Although the chances of a US rate rise today are being priced at 0%, Janet Yellen's statement remains highly relevant as investors try to work out whether the Federal Reserve committee believes the US economy is starting to slow down, or if the most recent jobs report suggests the US has effectively reached full employment? If the latter - and with the Federal Reserve's dual mandate focused on inflation and employment, interest rates could start to rise faster than the market is predicting.”

The Fed, which is widely expected to leave the funds rate unchanged at 0.50%, will present the latest projections and rate plots for the US economy after the rate announcement at 1900 BST.

On the corporate front, Swedish retailer Hennes & Mauritz was trading higher after reporting a 9% increase in sales in May.

Zara owner Inditex rallied after its first-quarter profit beat analysts’ expectations.

Shares in Zodiac Aerospace surged after its third-quarter sales exceeded forecasts.

In London, property group Berkeley was under the cosh as it posted a decline in full-year profit, while information technology company Aveva tanked after ending takeover talks with France’s Schneider Electric.